SCHEDULE A

(Form 8609)

OMB No. 1545-0988 Annual Statement

 Attach to Form 8609 and file with owner’s Federal income tax return.

(Rev. November 2003) Attachment Department of the Treasury

Internal Revenue Service

For Paperwork Reduction Act Notice, see instructions for Form 8609.

A Building owner’s name B Identifying number 

C Building identification number  

1 Eligible basis of building 1

2 .

2 Low-income portion (smaller of unit fraction or floor-space fraction) (if first year of the credit

period, see instructions)

3 Qualified basis of low-income building. Multiply line 1 by line 2 (see instructions for exceptions) 3

4 Part-year adjustment for disposition or acquisition during the tax year 4

5 Credit percentage 5 .

6 Multiply line 3 or line 4 by the percentage on line 5 6

7 Additions to qualified basis, if any 7

8 8

9 9 .

10 Multiply line 7 or line 8 by the percentage on line 9 10

11 Section 42(f)(3)(B) modification 11

12 Add lines 10 and 11 12

13 Credit for building before line 14 reduction. Subtract line 12 from line 6 13

14 Disallowed credit due to Federal grants (see instructions) 14

15

15 Credit allowed for building for tax year. Subtract line 14 from line 13, but do not enter more than

the amount shown on Form 8609, Part I, line 1b

16 Taxpayer’s proportionate share of credit for the year (see instructions) 16

17

18

17 Adjustments for deferred first-year credit (see instructions)

Taxpayer’s credit. Combine lines 16 and 17. Enter here and in Part I of Form 8586

General Instructions

Specific Instructions

Item B. If you are an individual, enter your

social security number. All others, enter your

employer identification number.

Item C. Enter the building identification

number (BIN) from Part I, item E, of

Form 8609.

Purpose of Schedule

Schedule A (Form 8609) must be filed by

the building owner each year of the

15-year compliance period.

Sequence No. 36a

Credit percentage. Enter one-third of the percentage on line 5

Cat No. 10614Q

18

Section references are to the Internal

Revenue Code unless otherwise noted.

Note: Some of the line numbers on the

November 2003, December 1988, and

March 1991 revisions of Form 8609 differ

from other revisions. In these cases, the

line references are shown in parentheses in

these instructions.

Schedule A (Form 8609) (Rev. 11-2003)

Line 1. Generally, the eligible basis of a

building for its entire 15-year compliance

period is the amount of eligible basis

entered on Form 8609, line 7b (Part II, line

1b, on the 1988 and 1991 revisions); line 7

on the 2003 revision.

Basis increases for buildings in certain

high-cost areas. In order to increase the

allocated credit for buildings in certain

high-cost areas, the housing credit agency

may increase the eligible basis of buildings

located in these areas (after adjustments, if

any, for Federal subsidies and grants). The

agency may make this increase under the

high-cost-area provisions of section

42(d)(5)(C).

For a building receiving separate

allocations for the existing building and for

rehabilitation expenditures, file a separate

Schedule A for each credit claimed.

Recapture of Credit

If the qualified basis of the building has

decreased from the qualified basis at the

close of the previous tax year, you may

have to recapture parts of the credits

allowed in previous years. See Form 8611,

Recapture of Low-Income Housing Credit.

If the agency used an earlier revision of

Form 8609 that did not have line 3b in Part

I to issue a 1990 credit allocation to which

the high-cost-area provisions were applied,

it should have notified you of the Part I

percentage increase in a separate

statement. Based on this statement,

The agency shows the increased

percentage of the eligible basis in Part I,

line 3b, of Form 8609. The eligible basis

entered on Form 8609 should reflect the

percentage increase.

Part-year adjustment for disposition or acquisition during the tax year

If the owner is a partnership, S corporation,

estate, or trust (pass-through entity), the

entity will complete and attach Form 8609

and Schedule A to its tax return. If you are a

partner, shareholder, or beneficiary in the

pass-through entity that owns the building,

file only Form 8586, Low-Income Housing

Credit, to claim the credit using the

information that the entity furnishes you on

Schedule K-1.

Do you have in your records the original Form 8609 issued by the housing credit agency (or a copy thereof) for the above

building? Yes No. If “No,” see instructions.

D

Did the above building qualify as a part of a qualified low-income housing project and meet the requirements of section 42

as of the end of your tax year? Yes No. If “No,” see instructions and stop here.

Was there a decrease in the qualified basis of the above building for this tax year? Yes No. If “Yes,” see

instructions. If “No” and the entire credit has been claimed in prior tax years, stop here.

E

F

Item D. You must have an original, signed

Form 8609 (or copy thereof) issued by a

housing credit agency assigning a BIN for

the building in order to claim the credit,

even if no allocation is required (in the

case of a building financed with

tax-exempt bonds). If filing electronically,

you must check “Yes” to certify that you

have the required Form 8609 in your

records. If filing on paper and attaching a

copy of the required Form 8609, please

also answer “Yes.”

Item E. If “No,” stop here and see Form

8611 to find out if you have to recapture

part of the credit allowed in prior years.

Item F. If “Yes,” see the instructions for

line 2 to figure the reduced qualified basis.

Also, see Form 8611 to find out if you have

If “No” and the entire credit has been

claimed in prior tax years (generally this

can occur after the 11th year for which the

credit has been claimed for the building),

do not complete lines 1 through 18.

to recapture part of the credit allowed in

prior years.

Note: Any building owner claiming credit

without receiving a Part I of Form 8609

that is completed, signed, and dated by an

authorized official of the housing credit

agency may have all credits disallowed.
Schedule A (Form 8609) (Rev. 11-2003) Page 2

1. The minimum set-aside requirement

elected for the project on Form 8609, line

10c (Part II, line 5c, on the earlier

revisions), is not met.

2. The deep-rent-skewed test (15-40

Test) elected for the project on Form 8609,

line 10d (Part II, line 5c, on the 1988

revision; Part II, line 5d, on the 1991

revision), is violated. The 15-40 Test is not

an additional test for satisfying the

minimum set-aside requirements of section

42(g). The 15-40 Test is an election that

relates to the determination of a

low-income tenant’s income. If this test is

elected, at least 15% of all low-income

units in the project must be occupied at all

times during the compliance period by

tenants whose income is 40% or less of

the area median gross income.

If you dispose of the building, or your

entire interest in the building, before the

close of the tax year, the low-income

portion must be determined on the date

you disposed of the building. If you

dispose of less than your entire interest in

the building, the low-income portion must

be determined at the close of the tax year.

First-year modified percentage. For the

first year of the credit period, you must use

a modified percentage on line 2 to reflect

the average portion of a 12-month period

that the units in a building were occupied

by low-income individuals. Find the

low-income portion as of the end of each

full month that the building was in service

during the year. Add these percentages

together and divide by 12. Enter the result

on line 2. For example, if a building was in

service for the last 3 full months of your

tax year, and was half occupied by

low-income tenants as of the end of each

of those 3 months, then assuming the

smaller fractional amount was the unit

Note: If the qualified basis of the building

is zero, or if the building has an imputed

qualified basis of zero, you may not claim a

credit for the building for the tax year. You

must enter zero on lines 3 and 16, and skip

lines 4 through 15, 17, and 18.

At-risk limitation for individuals and

closely held corporations. The basis of

property may be limited if you borrowed

against the property and are protected

against loss, or if you borrowed money

from a person who has other than a

This first year adjustment does not affect

the amount of qualified basis on which the

credit is claimed in the next 9 tax years. In

general, the credit is claimed in those

years by reference to the qualified basis at

the close of each tax year.

Line 3. Generally, multiply line 1 by line 2

to figure the portion of the eligible basis of

the building attributable to the low-income

residential rental units.

Imputed qualified basis of zero. However,

the qualified basis of the building (line 3) is

zero if any of the following conditions

apply.

Line 4. If you disposed of a building or

your entire interest therein during the tax

year and you posted a bond or pledged

securities under section 42(j)(6), you may

claim a credit based only on the number of

months during the tax year for which you

owned the building or an interest therein.

Similarly, if you previously had no interest

in the building, but you acquired the

building or an interest therein during the

tax year, you may claim a credit based

only on the number of months during the

tax year for which you owned the building

or an interest therein.

The owner who has owned the building

for the longest period during the month in

which the change in ownership occurs is

deemed to have owned the building for

that month. If the seller and new owner

have owned the building for the same

amount of time during the month of

disposition, the seller is deemed to have

owned the building for that month.

If the building is owned by a

pass-through entity, the entity does not

need to make any adjustment on line 4,

unless the entity either disposes of the

building or its entire interest therein, or

acquires the building or an interest therein

during the tax year (and the entity

previously had no interest in the building).

Do not make an adjustment on line 4 for

changes in the interests of the members of

the pass-through entity during the tax year.

Instead, the entity must reflect these

changes in the amount of credit it passes

through to its members.

Note: Upon a change of ownership, the

seller must give the new owner a copy of

Form 8609 with Parts I and II completed.

The buyer and seller must retain copies of

Form 8609 for recordkeeping purposes.

The new owner must follow the Schedule

A instructions and the instructions for Form

8609 to claim any credits.

Line 5. If the agency has made an

allocation on Form 8609, enter on line 5

the credit percentage shown on Form

8609, Part I, line 2. This percentage must

be shown on line 5 as a decimal carried

out to at least four places (e.g., 8.13%

would be shown on line 5 as .0813).

Because the first year credit is not

determined solely by reference to the

qualified basis at the close of the year, any

reduction in credit resulting from the

application of the first year adjustment may

be claimed in the 11th year. See the

instructions for line 17 on page 4.

3. You disposed of the building or your

entire interest therein during the tax year. If

you did not post a bond or pledge

securities under section 42(j)(6), in addition

to using an imputed basis of zero on line

3, you may have to recapture a portion of

credits previously taken. File Form 8611 to

figure and report the recapture amount.

This paragraph affects only those

taxpayers who dispose of the building or

their entire interest therein. Those acquiring

the building (or any interest therein) are not

affected and, if the minimum set-aside

requirements are otherwise satisfied, they

may take a credit for the fraction of the

year the building is owned by them,

regardless of whether or not the seller

posted a bond or pledged securities.

If you owned the building, or an interest

therein, for the entire year (i.e., the full 12

months in your tax year), enter zero on line

4 and go to line 5. If, for a portion of the

tax year, you had no ownership interest in

the building, multiply the qualified basis on

line 3 by a fraction, the numerator of which

is the number of months during the tax

year that you owned the building and the

denominator of which is 12 (e.g., if line 3 is

$100,000 and the building was owned for

9 months, then line 4 would be $75,000

(9/12  $100,000)). Enter the result on

line 4.

4. This is the 12th or later year of the

compliance period, and the entire credit

has been claimed in prior years.

Generally, a unit is not treated as a lowincome unit unless it is suitable for

occupancy and is used other than on a

transient basis. Section 42(i)(3) provides for

certain exceptions (e.g., units that provide

transitional housing for the homeless may

qualify as low-income units). See section

42(i)(3) for more details.

Line 2. Only the portion of the basis on

line 1 attributable to the low-income rental

units in the building at the close of the tax

year qualifies for the credit. This is the

smaller of (a) the fractional amount of

low-income units to all residential rental

units (the “unit fraction”) or (b) the

fractional amount of floor space of the

low-income units to the floor space of all

residential rental units (the “floor space

fraction”). This fraction must be shown on

line 2 as a decimal carried out to at least

four places (e.g., 50⁄100 = .5000).

Low-income units are units occupied by

qualifying tenants, while residential rental

units are all units, whether or not occupied.

Note: This increase cannot cause the

credit on line 15 of Schedule A to exceed

the credit amount allocated on line 1b,

Part I, of Form 8609.

Basis reductions. The amount of eligible

basis entered on Form 8609 does not

include the cost of land, the amount of any

Federal grant received for the building

during the first year of the credit period, or

any portion of a building’s adjusted basis

for which an election was made prior to

November 5, 1990, under section 167(k).

Do not reduce the eligible basis on line 1

of Schedule A by the amounts of any

Federal grants received after the first year

of the credit period. The calculation for line

14 of Schedule A will reduce the credit by

the amount of any Federal grants received

during the compliance period that did not

reduce the eligible basis during the first

year of the credit period.

For more details on determining eligible

basis, see the instructions for Form 8609,

line 7b (Part II, line 1b, on the 1988 and

1991 revisions; line 7 on the 2003 revision).

increase the eligible basis of the building

reported in Part II of the Form 8609 you

file.

fraction, you would enter .1250 on line 2

(i.e., [.5 .5 .5]  12 = .1250).

creditor interest in the property. See

section 42(k).

Note: If you were allocated a 70% present

value credit percentage for a building that

was not federally subsidized and the

building later receives a Federal subsidy,

your credit percentage is reduced to the

30% present value credit that was in effect

during the month the building was placed

in service or for the month elected under
Schedule A (Form 8609) (Rev. 11-2003) Page 3

Line 11. Additions to qualified basis must

be adjusted to reflect the average portion

of the year that the low-income units

relating to the increase were occupied.

This adjustment is required if there is an

Line 14. The eligible basis must be

reduced by the amount of any Federal

grant for the building or the operation

thereof during the 15-year compliance

period. If this reduction does not apply,

enter zero on line 14. Otherwise, figure the

reduction as follows.

Line 8. Similar to the instructions for line 4,

if you disposed of a building or your entire

interest therein during the tax year and you

posted a bond or pledged securities, your

credit for the year is adjusted to reflect the

number of months during the tax year that

you owned the building or an interest

therein. Similarly, if you previously had no

interest in the building, but you acquired

the building or an interest therein during

the tax year, your credit for the year is

adjusted to reflect the number of months

during the tax year you owned the building

or an interest therein.

1. Divide the total amount of all Federal

grants received for the building during the

compliance period that did not already

reduce the amount of the eligible basis

(reported on line 1 of Schedule A) by the

eligible basis on line 1 of this Schedule A.

Express the result as a decimal carried out

to at least four places.

If the building is owned by a

pass-through entity, the entity does not

need to make any adjustment on line 8,

unless the entity either (a) disposes of the

building or its entire interest therein or

(b) acquires the building or an interest

therein during the tax year (and the entity

previously had no interest in the building).

Do not make an adjustment on line 8 for

changes in the interests of the members of

the pass-through entity during the tax year.

Instead, the entity must reflect these

changes in the amount of credit it passes

through to its members.

Line 9. The credit for additions to the

building’s qualified basis is determined

using two-thirds of the credit percentage

allowable for the building’s original

qualified basis. Therefore, one-third of the

credit percentage (expressed as a decimal

carried out to at least four places) on line 5

is not allowed. Enter on line 9 one-third of

the amount shown on line 5. This amount

must be reported on line 9 as a decimal

carried out to at least four places (e.g., if

the credit percentage entered on line 5 is

.0813, one-third of that percentage would

be expressed as .0271). See section

42(f)(3).

Line 10. If you owned the building, or had

an interest therein, for the entire tax year,

multiply line 7 by line 9. If you had no

ownership interest in the building for a

portion of the tax year, multiply line 8 by

line 9.

If you owned the building, or an interest

therein, for the entire tax year, enter zero

on line 8 and go to line 9. If you had no

ownership interest in the building for a

portion of the tax year, multiply the

additions to qualified basis on line 7 by a

fraction, the numerator of which is the

number of months during the tax year you

owned the building and the denominator of

which is 12. Enter the result on line 8.

Note: If the eligible basis on line 1 of this

Schedule A was increased by a percentage

allowable under section 42(d)(5)(C) (and

reflected either in Part I, line 3b, of Form

8609 or in a separate statement issued to

you by the housing credit agency), then

increase the total amount of all Federal

grants in 1 by this percentage increase and

divide this amount by the eligible basis on

line 1 of this Schedule A. For example, if

the percentage increase is 130% and all

Federal grants total $11,000, multiply

$11,000 by 1.3000 and divide the result

($14,300) by the eligible basis on line 1.

2. Multiply the decimal amount

determined in 1 by the credit on line 13.

Enter this result on line 14.

If the taxpayer posts a bond or pledges

securities upon the disposition of the

building or an interest therein, the taxpayer

is allowed credit for the year both with

respect to the ownership interest disposed

of by the taxpayer and the interest retained

by the taxpayer. For example, again

assume that a taxpayer owns 100% of a

building for 9 months of the tax year and

40% of the building for the last 3 months

of the tax year. After posting a bond or

Note: The aggregate credit claimed by the

owners of the building cannot exceed the

line 15 credit amount for the building.

3. If a pass-through entity is completing

Schedule A as the sole owner of the

building, enter the line 15 credit (after

adjustment for any applicable special rule

below) on line 16.

1. If the building is owned completely by

one taxpayer, enter the line 15 credit (after

adjustment for any applicable special rule

below) on line 16.

2. If the building is owned by more than

one taxpayer, and those taxpayers are not

members of a pass-through entity, then

the line 15 credit (after adjustment for any

applicable special rule below) must be

distributed according to each taxpayer’s

respective ownership interest in the

building. For example, if a building is

owned by individuals A and B (60% by A

and 40% by B), each would complete a

separate Schedule A as follows. Lines 1

through 15 would be the same for each,

assuming no part-year adjustments are

necessary. However, A would enter 60% of

line 15 on line 16, and B would enter 40%

of line 15 on line 16. Therefore, enter on

line 16 your share of the line 15 credit for

the building that relates to your interest in

the building. If your interest increases or

decreases during the tax year, the change

must be taken into account in determining

your share of the line 15 credit.

Line 16. To determine the amount to enter

on line 16, you must take into account the

applicable rules listed in paragraphs 1, 2,

3, and the Special rules below.

Special rules. If a taxpayer is subject to

recapture because of failure to post a

bond or pledge securities upon the

disposition of a building or interest therein

(see De minimis recapture rule below), no

credit is allowed to the taxpayer for that

percentage of the interest disposed of by

the taxpayer. The credit allowed to the

taxpayer for the tax year is determined by

reference to the taxpayer’s remaining

interest in the building at the close of the

tax year. For example, assume that a

taxpayer owns 100% of a building for 9

months of the tax year and 40% of the

building for the last 3 months of the tax

year. (The taxpayer disposed of a 60%

interest at the close of the ninth month.) If

the taxpayer does not post a bond or

pledge securities, the taxpayer’s credit on

line 16 would be based on 40% of the line

15 credit for the building. Similarly,

although a taxpayer might not be subject

to recapture upon a disposition of a de

minimis portion (explained below) of the

taxpayer’s interest in the building, no credit

is allowed to the taxpayer for the

percentage of the interest disposed of by

the taxpayer. The credit allowed to the

taxpayer for the tax year is determined by

reference to the taxpayer’s remaining

interest in the building at the close of the

tax year.

If you are claiming a credit for additions

to qualified basis, you must subtract the

original qualified basis of the building at

the close of the first year of the credit

period (see Form 8609, line 8a (Part II, line

2a, on the 1988 and 1991 revisions)) from

the building’s qualified basis entered on

line 3 of Schedule A. Enter the result on

line 7. If the result is zero or less, skip lines

8 through 12 and enter the credit from line

6 on line 13.

increase in the qualified basis of the

building from the previous tax year. To

determine this adjustment amount,

complete the worksheet on page 4.

section 42(b)(2)(A)(ii), whichever applies.

The 30% present value credit applies to

the building for the year the Federal

subsidy was received and for the remainder

of the compliance period, whether or not

the Federal subsidy is repaid. See section

42(i)(2).

Line 6. If you owned the building, or had

an interest therein, for the entire tax year,

multiply line 3 by line 5. If you had no

ownership interest in the building for a

portion of the tax year, multiply line 4 by

line 5.

Line 7. An addition to qualified basis results

when there is an increase in the number of

low-income units or an increase in the floor

space of the low-income units over that

which existed at the close of the first year

of the credit period (before application of

the modified percentage calculation).

Credits for an addition to qualified basis are

claimed at the reduced credit percentage of

two-thirds of the credit percentage

(expressed as a decimal carried out to at

least four places) on line 5 through the end

of the 15-year compliance period.

If you are not claiming a credit for

additions to qualified basis on line 7, skip

lines 7 through 12 and go to line 13.

Lines 7 Through 12

You may claim a credit for an

addition to qualified basis only

if credit amounts have been

allocated by the housing credit

agency to cover these

additions.
Schedule A (Form 8609) (Rev. 11-2003) Page 4

Line 11 Worksheet (Keep for Your Records)

Enter the qualified basis of the building from line 3 of this tax year’s Schedule A 1

Multiply the amount on line 1 of the previous year’s Schedule A by the amount on line 2 of that

Schedule A

Increased qualified basis. Subtract line 2 above from line 1 above. But if line 2 above is more

than zero but less than the original qualified basis of the building entered on Form 8609, line 8a

(Part II, line 2a on the 1988 and 1991 revisions), then enter the amount from line 7 of this Schedule

A instead

Note: If line 3 above is zero or less, do not complete the rest of this worksheet. Instead, enter

-0- on line 11 of Schedule A and go to line 12.

Modified percentage. For each month during the tax year, figure the increase, if any, in the

low-income portion of the building for that month over the low-income portion of the building at

the close of the previous tax year (the amount on line 2 of the previous tax year’s Schedule A).

For example, if the previous tax year’s low-income portion of .5000 remained at .5000 for the

first 9 months of this tax year and then increased to .7500 for October, November, and December,

then subtract .5000 from .7500 to get an increase of .2500 for each month. Add these amounts

together, divide by 12, and enter the result. (This amount must be shown as a decimal carried

out to at least four places (e.g., .2500 .2500 .2500 = .7500, divided by 12 = .0625.)) 4

Increased qualified basis entitled to reduced credit. Multiply line 4 above by Schedule A, line 1 5

Increased qualified basis not entitled to reduced credit. Subtract line 5 above from line 3 above 6

Line 11 modification. Multiply line 6 above by two-thirds of the amount on line 5 of Schedule A.

Enter the result here and on line 11 of Schedule A 7

1

2

3

4

5

6

7

For example, see the example under

First-year modified percentage on page

2. If this is the 11th year, enter .8750 times

the eligible basis of the building (line 1)

times the low-income portion (line 2) times

the credit percentage (line 5). The factor

.8750 is 1.0000 minus .1250, the modified

percentage figured for year one in the

example.

2

3

Line 17. Deferred first-year credit. The

first-year credit may have been reduced

based on the number of full months the

building was in service. The deferred

balance of the credit for the first year is

allowed in the 11th year. Include it on line

17 as a positive amount.

Upon application by the building owner,

the IRS may waive any recapture of the

low-income housing credit for any

de minimis error in complying with the

minimum set-aside requirements.

If a taxpayer posts a bond or pledges

securities upon the disposition of the

building or upon a disposition of the

taxpayer’s entire interest in the building,

the taxpayer’s line 16 credit amount is

determined by multiplying the line 15 credit

amount by the percentage interest in the

building disposed of by the taxpayer. For

example, if a building is owned by

individuals A and B (60% by A and 40%

by B) and at the close of the fifth month of

the tax year, C buys A’s 60% interest in

the building and A posts a bond or

pledges securities, then A would enter

60% of line 15 on line 16. (Lines 4 and 8

De minimis recapture rule. For

administrative purposes, the Service has

adopted a de minimis rule that applies to

partners in partnerships (other than

partnerships described in section

42(j)(5)(B)) owning interests in qualified

low-income buildings. The rule allows a

partner to elect to avoid or defer recapture

resulting from a disposition of interest in a

partnership without posting bond until the

partner has disposed of more than 331⁄3%

of the partner’s greatest total interest in

the qualified low-income building through

the partnership. See Rev. Rul. 90-60,

1990-2 C.B. 3, for more information on the

de minimis rule.

pledging securities, the taxpayer’s credit

on line 16 would be based upon 9⁄12 of

100% (or 75%) of the line 15 credit for the

building plus 3⁄12 of 40% (or 10%) of the

line 15 credit amount.

have already taken into account the 5

months of the tax year that A held an

interest in the building.)